Unfortunately the price continues to get away from me. However, given price action of late I feel that I could lower my proposed sell limit to 1.3715 – just below the 23.6% retracement of the May sell-off. On the hourly chart there is strong supply seen here from May 14, so I feel this could be a good area to work offers into.
Perhaps a break of the 200-day moving average could be a trigger for further short positions, however when running a scan of the success of trading purely around the average, the results are unconvincing. Naturally, results will be premised on the actual direction of the 200-day average, but for the average to subsequently fall, price needs to fall to pull it down.
The short-term target for the bears is 1.3520 (the 38.2% retracement of the July 2013 to May 2014 rally), but there are signs that the pair could head lower over the rest of the year. Recall the markets’ year-end consensus is for EUR/USD to be at 1.32 by Q4 2014, which to me seems fair.
In European trade today we get the German IFO survey, which takes the pulse of around 7000 German companies. The market is expecting a slight pullback in the three surveys (current conditions, expectations and business climate), so this could play into expectations around ECB action on June 5.